Rejected oil spill claims will get a second look, says Ken Feinberg

View full size(Press-Register/Bill Starling)Oil spill claims czar Ken Feinberg answers a question during a meeting with possible claimants at the Bayou La Batre Community Center Saturday, Aug. 21, 2010. Feinberg said Monday 2,000 claims denied by the Gulf Coast Claims facility will get a second look.

Claims czar Ken Feinberg announced Monday that the 2,000 individuals and businesses denied payment from his operation will get a second look, and he expects many will be ruled eligible.

According to statistics from the Gulf Coast Claims Facility, about 650 Alabama claimants had been denied or deemed ineligible, as of Saturday.

David Wright, who owns a homebuilding company that was ruled ineligible last week, said he received a phone call Monday morning saying that his claim would be re-evaluated.

Wright said he had to lay off 15 workers when prospective clients changed their building plans after the BP PLC well began gushing oil into the Gulf of Mexico on April 20. While Wright’s business was denied payment, one of his employees was approved and paid about 80 percent of what he requested.

“She said it was being reviewed at the highest level,” Wright said of his claim.

Bert Sanders, an accountant with Gulf Shores-based Grant, Sanders & Taylor PC, said Wright isn’t the only business denied under strange circumstances. He said that he knows of retail stores at The Wharf that have been approved for payment, but stores at SanRoc Cay in Orange Beach and along Beach Boulevard in Gulf Shores that were denied.

The claims process has come to dominate discussions in places like south Baldwin County, where people rely on lucrative summer tourist seasons to pay the bills for the entire year.

With revenues slashed by the huge drop in tourists, many businesses and workers have said they are relying on the claims process to keep them afloat until next summer.

BP started a claims operation shortly after the spill, but after complaints of slow payments and frustrating red tape, the company was pressured by the White House into setting up a $20 billion fund and letting Feinberg administer it.

Now Feinberg, who took over Aug. 23, is bearing the brunt of the claims criticism. Business owners, public officials and accountants say that payments to businesses are often only a fraction of the actual loss, that legitimate claims are being denied and that claims decisions often lack consistency.

On Friday, U.S. Rep. Jo Bonner, R-Mobile, wrote Feinberg a letter and expressed his “extreme disappointment that you have not lived up to the promise you first showed, nor to the commitments you made to me personally.”

A spokesman for Bonner said Monday that he was working with Feinberg to arrange a meeting this week at Bonner’s congressional office in Washington, D.C.

Bonner’s letter came a week after Tom Perrelli, an assistant U.S. attorney general, wrote Feinberg to say that the speed at which his operation was reviewing claims was “unacceptable.”

Since that time, statistics show vast improvement in the review speed. On Sept. 18, about 19,500 claims had been approved for payment. A week later, on Saturday, that number had jumped to more than 35,000, a rate of more than 2,200 claims a day.

The number of claims awaiting review in that time period dropped from 32,000 to about 8,000.

The size of business claims checks seems to have increased, as well. On Sept. 18, only about 35 percent of business claims payments were higher than $10,000. As of Saturday, about 50 percent of business claims were in that range. However, in Alabama that number lagged, with less than 40 percent of businesses getting paid more than $10,000.

Feinberg’s process allows businesses and individuals to get emergency checks that cover six months worth of revenue.

And Feinberg on Saturday announced that he was going to group claims by industry and give more benefit of the doubt to financial assumptions made by business owners. That will allow for faster processing and more generous checks, he said.

Sanders said he spoke to Feinberg on Monday, and the czar said the process was improving.

“I’m willing to give him the benefit of the doubt to get it right,” Sanders said. “But we’re just running out of time.”

(Press-Register Political Editor George Talbot contributed to this report.)